BELIZE CITY, Fri. Jan. 1, 2016–Even as Opposition lawmakers in Venezuela are advocating for a pullback on the PetroCaribe accord with foreign states, Prime Minister and Minister of Finance Dean Barrow in his New Year’s Message for 2016, warned that the most pronounced of the challenges that will confront Belize in the months ahead will be a continued reduction in PetroCaribe flows, which, he said, had already been slashed in half in 2015 due to plummeting world market prices for crude.
“This, combined with the drying up of earnings from our own petroleum exports, will put a severe crimp in Government revenues,” Barrow added.
“It is what, in the face of the coming step-up in super bond payments and the compensation award expected to be handed down towards the middle of the year, has caused us to raise the duty on fuel imports,” the Prime Minister added, explaining why pump prices have now gone up instead of down, on account of the new tax measure.
At the start of the week, pump prices rose after Government increased taxes on premium and regular gasoline, as well as diesel. However, the taxes on kerosene, the least expensive fuel used by the economically marginalized for cooking and lighting, remained unchanged.
Barrow said that the landed cost of the imported fuel products had dropped so low, that the Government judged the increase to be “a bearable burden.”
Before the year closed out, though, there was some reprieve at the pumps, when consumers received the benefit of reduced prices on fuel imports, although the tax increase, implemented days ahead of the new shipment, will continue to remain in effect for the foreseeable future.
In his upbeat remarks, which promise an expansion in the government’s “trademark” infrastructure drive, Barrow said that the increase in fuel taxes is “the only tax measure we will take,” in order to “meet debt obligations…”
Of note is that the PetroCaribe law permits the Government to use the proceeds from the fund to settle compensation awards for two nationalized utilities: the Belize Telemedia Limited and the Belize Electricity Limited. Assuming that there would be enough in the PetroCaribe fund, the law also makes provision for a buyback of the super bond from PetroCaribe funds.
Apart from helping to compensate for shortfalls to meet debt obligations, the tax increase would also “pay for expansion in services, particularly regarding national security and the acquisition of assets such as the three BDF helicopters and the two latest model Coast Guard boats,” Barrow outlined.
Meanwhile, government spending has also been pledged from retained PetroCaribe funds for further construction projects. In the last sitting of the House of Representatives for 2015, at which $44.7 million was approved from PetroCaribe funds for October to December 2015, Barrow made it clear that the Halcyon days for PetroCaribe inflows are gone.
However, Barrow, in his New Year’s Day address, said that, “There is enough that we have set aside from the PetroCaribe days of plenty,” for projects such as the Belize City Center and the tourism road network improvements.
Among other works cited are the rehabilitation of the Philip Goldson Highway from the Airport junction to Belize City and the road to Caracol—an upgrade which tourism stakeholders say is badly needed to bring tourism dollars back to Belize lost because some tours are diverted to Tikal, Guatemala, due to the degradation of the access road.
“The point is that in 2016, there will continue to be public infrastructure work and jobs aplenty, with all the multiplier benefits to our people that this entails,” the Prime Minister said.
“In terms of the larger economy and the private and productive sector, the outlook is just as promising,” he added.
In his forecast, Barrow also said that “…it is in tourism that our prospects continue to shine brightest.”
The year 2015 saw “continuing record advances” in tourism, said Barrow, adding that “…on that front, the headline news for 2016 is twofold: NCL’s Harvest Caye project becomes fully operational by April and brings with it two thousand jobs for Southern Belize; and the Supreme Court ruling on Belize City Port exclusivity—or lack thereof—clears the way for us to greenlight a new, Old Capital alongside docking facility.”
After citing the positives for 2015—no hurricanes, no social upheavals, and peaceful, historic elections among them—Barrow said that “…there are still multiple reasons for optimism, and that we see our way clear to another successful year.”
Barrow also previewed more plans for 2016:
“…we expect to develop the Commerce Bight container port in Stann Creek…”
“…we will transition our special purpose vehicle, Belize Infrastructure Limited, to be Government’s agent to facilitate [the development of the ports…]”
“…we also intend to appoint an official Monitor in 2016 to work with the Civil Service to ensure quality control in Government’s interaction with the public. The Monitor will, as well, have responsibility to review the implementation pace and effectiveness of all Government’s manifesto commitments.”